Zoom reported a non-GAAP EPS of USD 1.36 for Q2 FY2022, exceeding analyst consensus expectations of USD 1.16 (an earnings surprise of 17%), and grew 48% year-over-year (YoY). Zoom’s revenue rose 54% YoY to USD 1.02 billion, beating consensus expectations by 3%. However, quarter-on-quarter (QoQ) revenue growth decelerated to 6.8% as schools reopened and workplaces relaxed remote work policies as the vaccination drive picked up.

Zoom’s stock traded 11% lower in after-hours trading due to the company’s upgraded guidance for Q3 coming in below analyst estimates. Zoom guided for revenue between USD 1.015-1.02 billion (vs analyst estimates of USD 1.02 billion) and non-GAAP EPS of 1.07 (vs analyst estimates of 1.10) for Q3 FY2022.

The Q2 revenue growth was supported by a 131% YoY increase (about 14% QoQ) of active customers (trailing 12-month revenue greater than USD 100,000) to around 2,280. Customers with more than 10 employees on the platform rose 36% YoY to 504,900 and the net dollar expansion rate among these customers was reported to be above 130% for the 13th consecutive quarter. The Americas region accounted for 67% of total revenue and posted YoY growth of 50%.

Zoom’s non-GAAP gross margin improved by about 390 basis points to 76.2% in Q2 FY2022 compared to the previous year. The improvement was attributed to the activation of new data center capacity. Non-GAAP income from operating rose 53% YoY to USD 425 million with a steady margin of 42% compared to the previous year.

The company’s full-year revenue guidance for FY2022 was marginally upgraded to roughly USD 4 billion (from roughly USD 3.98 billion) implying revenue growth of around 52% YoY. Non-GAAP income from operations was projected to be USD 1.5 billion, implying growth of around 54% YoY. Zoom upgraded EPS guidance to between USD 4.75-4.79, implying a growth of 43-44% YoY.